How to succeed at setting up a B2B marketplace
Deciding to launch a marketplace is the first step in a much bigger process. For a growing number of organisations across industries recognising the power of the marketplace model, the question quickly becomes: how do you reach marketplace critical mass quickly so that you can reap all the benefits?
Business leaders must choose between building a proprietary solution or finding a technology partner to help tailor the process. This article is intended to help outline some of the issues leaders will have to consider when coming to this decision and demonstrate the ways in which NovaFori is well placed to address them. These issues will be relevant to an existing business of reasonable scale (circa 50m+ of revenue) in the B2B space looking to digitise the way it sells to customers (a single-sided market). Or equally a well-funded start-ups (or internally funded project) looking to create a new multi-sided marketplace, bringing buyers and sellers together in a new electronic venue, with a minimum all-in budget of 2m+.
Whatever the nature of your business, here are 10 steps to follow to success when setting up a B2B marketplace:
Start with a vision to engage with the end user.
You will need a grand vision, a well-thought-through mission statement, or a concept about the transformation of how trade is conducted within your business or sector. You must begin with a north star; it shouldn’t be a wordy 100-page document; it should fit on one PowerPoint slide. It must catch people's attention; you don’t want this to be another zebra in the herd.
Organisations need a narrative to create initial engagement. People respond much better to something they can either agree or disagree with.
Listen to feedback and find the problem which needs solving.
Park your ego, the corporate strategy, and everything you’re expecting about the main problems in your industry. All of it.
Listen with a practised ear so you can pick out the salient points from your feedback about what problems are important to your potential end-users.
Have composites in mind to drive the process to more concrete outcomes using what you’ve heard. Is this more important than that? Is this more practically solved in the short term than that?
People respond much better (and are more accurate) to comparatives between two things than measuring something intangible. A simple and stupid example; how much does an elephant eat daily? Or does an elephant each more than a giraffe every day?
Remember, if this is transformation, you’re not in the process of incremental improvement; you have no baseline; it’s all theoretical.
Iterate the thinking to ensure the solution space represents the least possible effort to test.
In business, there are many entrenched practices, workflows, and IT systems. Refine your MVP (first-stage product) to require the least amount of change and effort to test; it’s about everyone’s effort, not just your business, department, or team.
Everyone likes progress; no one likes ‘’change’’, lean into this and try to reduce the number of obstacles to adoption.
Revise the vision, create a tactical vision and a future strategic vision.
Once you have your thinking and approach nailed down into something resembling a strategy, go back and boil it down. It’ll help you back-check what you develop, to make sure the things you are doing are going to make you progress towards your vision.
Have a short-term tactical vision and a “shooting for the moon” longer-term strategic vision. This will help you once you start to iterate so you don’t lose yourself down a rabbit hole. In other words, don’t overfit your solution to today’s needs; keep one eye on the future.
Decide how you will measure your success.
You will need at least two KPIs, one for your tactical solution and one for the moon shot. Based on this, consider how you will measure yourself and set expectations with your peers and stakeholders. Do not allow yourself to be classified as a failure because you are being measured in the wrong way for what’s appropriate in your current stage of development.
B2B marketplaces are a long-term slog, not a short-term sprint; you need to keep support for your actions. KPIs are the only way to do this.
Test, Measure, Learn!
Don’t be tempted to “develop your way into being the best marketplace”; technology has very little to do with success.
Never, ever think more features will increase adoption or create a differentiator. Value, efficiency, and simplicity are your watchwords.
Technology is expensive and time-consuming; use it like a scarce resource, not a fuel for the engine of adoption and growth.
This is about selling and value creation or removing inefficiencies.
Things like Machine Learning (ML) can help deliver efficiency, but don’t expect it to be a silver bullet.
Over-engineering technology and potentially making the end-user experience complex is the most common reason for failure. Spending your budget on many features before the business case is tested and having an empty tank when you need it most to respond to post-go-live improvement or pivots is unwise.
Emphasis should be placed on the M of Minimal Viable Product.
Design with the end-user in mind and test your interpretation of the end-user with real people.
This one links to the above; the simpler something is, the more likely it will be used. The old Domino’s pizza adage works here; the easier they made it to order pizza, the more pizzas they sold. Also, think of the Amazon ethos; the least number of clicks to complete a transaction.
B2B marketplaces are self-service, and a lot of the B2C thinking should be baked in.
Early on, test your User Interface and Customer Experience with actual users who know nothing of your vision and product. Keep doing this as much as possible.
To caveat, only look for ease of use and other worthwhile feedback. Don’t be tempted to “design the camel” by taking every bit of feedback into the design loop. As with KPIs make sure you know what you’re testing and what you’re looking for and discard the rest within reason.
Don’t go big or wide; go niche and focused; a little success is easier to build on than a big failure.
This is the second biggest reason B2B marketplaces fail, big ambitions lead to a very difficult cold start. Otherwise known as the “empty disco syndrome”. Think of it like this, a large room, big dance floor, music’s on, but no one is getting up first. A small room, a small stereo and a good vibe amongst a few people, and you’ve got dancing.
Use the Uber mentality where possible; start geographically small, with a very specific service and expand out.
The broader your marketplace intentions, the more money, time, effort and likelihood you won’t be able to build momentum. You have been warned.
Keep moving forward, small steps towards creating bigger value.
Your MVP / tactical vision is your first baby step towards a broadly adopted marketplace or digital sales channel. Never spend all your budget on the first phase. However wise you are, however much planning you’ve undertaken, user feedback, etc., there will be some pertinent lessons learned once transactions start to flow.
For example, it all works fine for single transactions, but many things are needed to make repeat transactions work well. Perhaps you got a few of the building blocks wrong, or the system users are not the CFO you expected, but a junior somewhere in eProcurement who needs a different customer experience. Or, your user group is made up equally of CFOs and eProcurement people who want a different experience based on their user role… well, you get the picture, save something back.
This is a two-parter because there are the things you need to do to refine, and then there’s what you need to do next to build the value proposition.
Once you’re up and running...
Well, that’s a topic for another blog post, but thank you for taking the time to read this one. I hope you’ve found it helpful.
Setting up a digital market isn’t an easy task. To succeed and achieve scale in the long term, you’ll need an experienced, knowledgeable technology partner. Our enterprise marketplace experts at NovaFori are backed by learnings from launching and scaling marketplaces worldwide. As a result, we can simplify and accelerate the development process while still offering the flexibility needed to tailor your solution to your unique business needs. Furthermore, NovaFori helps organisations define their vision on an actionable roadmap to unlock value for their business, starting from working together to understand use cases and opportunities that align with their business priorities using advanced trade models, all the way to agile execution.
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